While it may be synonymous with increased efficiency and the reduced cost of overheads, AI’s profound complexity is undeniable. Risk teams must be aware of the challenges (and opportunities) that it represents if financial institutions hope to lead the charge in a new, AI-enabled era.
In light of our upcoming event, AI in Risk: The New Frontier of Finance on January 30th (save your space here), we’ve explored some of the most pressing AI topics facing the industry’s risk teams today. Check them out below.
Generative AI
Generative AI has leapt into the limelight as one of the most talked-about tech trends of 2023, and for good reason – it signifies a tectonic shift in the way the world does business. From the development of synthetic AI training data to hyper-personalised financial advice (just look at NatWest and IBM’s Cora project for a prime example), generative AI is becoming commonplace.
It can be difficult to predict how this tech will evolve, so risk professionals must remain vigilant. Some of the more common challenges facing today’s AI-savvy risk functions include:
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Data bias
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Regulatory pressure
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A lack of explainability (ChatGPT’s common inability to identify an information source is a good example)
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The growing complexity of cybercrime
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Ethical considerations
All of these challenges haunt the majority of AI use cases in today’s finance landscape, but a dependable risk team can mitigate the worst of them with the right measures.
Rising Demand for Risk Talent
Risk jobs have long provided the stalwart lines of defence that both enable and protect financial services companies – the role is destined to change, just like the landscape it’s responsible for serving.
As AI becomes more prevalent, risk managers will need to develop new skills to effectively manage emerging risks. We’ve seen a spike in the demand for tech-savvy risk managers, a major culprit in the case of the widening skill gap. Combined with a growing emphasis on risk culture, cross-functional collaboration, and data management, the talent pool begins to reduce.
Those who can adapt quickly are well-positioned for success in the coming years. We expect the risk management position to feature a more prominent organisational role as their responsibilities develop and AI settles in. It’s a bright future for risk professionals who can look forward, adapt, and embrace new ways of tech-enabled work.
Deepfakes
According to one member of our network, Cybersecurity experts were busy warning the finance world about the dangers of deep fakes over ten years ago. Fast forward to 2023, and their concerns have materialised en masse. In 2020 for example, a Hong Kong-based branch manager was scammed to the tune of $35 million by an AI-generated voice. The voice was designed to sound just like the company director’s.
As usual, an informed team is a robust line of defence, but unfortunately, many companies find themselves lacking in that particular knowledge area. The same might be said for cybersecurity in general – a report from Fortinet found that a staggering 52% of leaders continue to believe their employees lack the knowledge needed.
Broadgate’s Risk and Analytics Team
Here at Broadgate, our specialised risk and analytics know what it takes to build a robust risk function in a changing world. Our community-led staffing methodology enables us to match leaders with the best the market has to offer, even in a talent-short landscape.
Courtesy : https://www.broadgatestaffing.com/blog/2023/11/ai-enabled-risk-management-charting-the-future-of-finance?source=com.google.android.googlequicksearchbox